Diversifying Export Market to Canada: Are We Ready?

Bangladesh has been listed in the “Next 11 after BRIC” (Goldman Sachsanalyst report).

“Frontier Five” economies (JP Morgan) Bangladesh ahead of all countries in South Asia, except India (S&P and

Moody) Business climate in Bangladesh is on an upswing. The economy has been growing at over ~ 6% for the last 5 years. The FDI into Bangladesh was 913 million USD in 2010, almost doubling

in the last 7 years. Bangladesh is also the world’s 2nd largest exporter of apparels and RMG. Bangladesh is the 42nd largest economy in the world (In 2010, it was

48th largest economy) according to IMF in terms of purchasing powerparity.

Government of Bangladesh has estimated GDP growth rate at 7% in thebudget for the current fiscal year. In 2012-13 the projected GDP growthis 7-8.2%.

GDP (2010-11) : US$ 113.50 Billion Per Capita GDP (2010-11) : US$ 818 GDP Growth Rate (2010-11) : 6.66% Sectoral Share of GDP (2010-11) : Industry - 30.33%,

Agriculture-9.45%, Service - 49.72 Contribution of Manufacturing to GDP: 18.41% Exports- 22.92 bn. US$ (2010-11) Imports- 33.65 bn. US$ (2010-11) Export Contribution to GDP : 16.4%, RMG to GDP : 12.2% FDI : In 2010 : US$ 913 Million, In 2009 : US$ 700 million Export Growth : 5.4 % to 16.4 % of GDP between 1986-

2010

Export and Import

0

500010000

1500020000

25000

3000035000

40000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Mill

ion

US

$

Export Import

Source: Export Statement, EPB, Import Statement, Bangladesh Bank

Benchmark FY 2009

FY 2011

FY 2015

Govt. TargetFY 2021

Real GDP Growth (%)

5.9 6.7 8.0 10.0

Gross Investment (% of GDP)

24.2 24.7 32.5 37.5

Export (Billion US$)

15.6 22.92 34.2 91.1

Import (Billion US$)

20.3 33.65 45.2 131.3

Remittance (Billion US$)

9.7 11.65 15 48.5

Gross Investment % of GDP

05

1015202530354045

2009 2011 2015 2021 2030

Pe

rce

nta

ge

of

GD

P

GrossInvestment % of GDP

Source: Bangladesh Economic Survey-2011 and medium-term budgetary framework, 2011-12 to 2015-16, by Finance Division, MoF, EPB, Bangladesh Bank

Countries WovenGarments

Knitwear Frozen foods

Chemicalproducts

Jute & Jute Goods

Agri-Products

Others Total

USA 3506 1119 88 6.7 20 16.2 351.6 5107.52

Germany 1109 2022 42 0.437 11 8.3 245 3438.69

UK 769 991 87 6.6 8 34 169 2065.38

France 406 1000 20 0.4 1 1.1 110.36 1537.98

Netherlands

374 591 62 0.126 19 10.4 50 1107.13

Canada 462 433 10.4 0.004 1.93 2.17 85.2 994.67

Italy 237 525 3.6 0.011 4.3 7.2 89 866.42

Belgium 163 300 128.65 - 43 6.9 24.9 666.24

India 25 10 56 6 231 40.5 144 512.51

Japan 154 94 16.2 .0118 6.7 0.437 163 434.12

(Million US$)

Source: Export Statement 2010-11, EPB

CountriesPercentage hold among

Total Export of Bangladesh

USA 22.28

Germany 15

UK 9.01

France 6.7

Netherlands 4.83

Canada 4.33

Italy 3.78

Belgium 2.9

India 2.3

Japan 1.9

Source: Export Statement 2010-11, EPB

Share of Total Export of Bangladesh by Countries

0

5

10

15

20

25

USA

German

y UK

Fran

ce

Nether

lands

Canad

aIta

ly

Belgium

Japa

nInd

ia

Pe

rce

nta

ge

CountryShare

About 80% of export are concentratedto only four markets like USA-22.28%,E.U-52.14%, Canada-4.34%, India-2.3%

Items Share of Total Export

Knitwear 41.36%

Woven Garments 36.78%

Jute Goods 4.86%

Frozen Foods 2.73%

Raw Jute 1.56%

Leather 1.3%

Chemical 0.46%

Total 89.05%

Total Export items of Bangladesh are about 700. But these seven items contribute about 89.05% of our total export in the FY 2010-11 where share of first two items is 78.14%.So, it’s a must to go for product diversification.

Source: Export Statement 2010-11, EPB

Canada's primary imports from Bangladesh include ready-made garments, fish, bicycles, textile fabric and yarn, footwear and ceramics etc.

So, there is huge potentials ofincreasing export to Canada throughProduct Diversification amongstthose 200 Export items.

Bangladesh's primary imports from Canada include cereals, vegetables, miscellaneous grain and seed, iron and steel, wood pulp, and machinery etc.

Foreign Exchange Reserve and Remittance

0

2000

4000

6000

8000

10000

12000

14000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Mill

ion

US $

Foreign Exchange Reserve Remittance

Canada’s commercial relationship with Bangladesh has growndramatically in the last few years. The value of bilateral merchandisetrade has more than tripled from $487.0 million in 2005-06 to $1570million in 2010-11 .

Bilateral relationship between Bangladesh And Canada

Bangladesh’s Export to and Import from Canada (In M US$)

Year Bangladesh’s Export to Canada

Bangladesh’s Import from Canada

Total Trade

2005-06 407 80 4872006-07 458 156 6142007-08 533 362 8952008-09 663 287 9502009-10 667 453 10202010-11 994 576 1570

The Trade balance has been in Bangladesh’s favor. During the last sixyears the value of merchandise export has grown by 144 % wheremerchandise import has grown by 620 %.

Canada established bilateral relations with Bangladeshafter independence in 1971. Built upon shared values ofdemocracy and pluralism, relations are focused ondevelopment cooperation, trade and investment,regional security, immigration and people-to-peoplelinks.

Establishment of Bangladesh-Canada bilateral relations

Bilateral development assistance is central to Canada'srelationship with Bangladesh. Development assistance isconcentrated in three areas: health, education and economicgrowth. In 2009, as part of Canada's new aid effectivenessagenda, Bangladesh was selected by CIDA as one of20 countries of focus.

There are more that 50 development project withBangladesh. These projects focused several areas likehealth, education, Business Services for Small Enterprises,technical support, disaster management, poverty reduction,Research etc.

Power and Alternative Energy will be the need of the future andcrucial to the country's development. As a key sector it offershuge scope for investment and development.

Developing infrastructure in urban areas as well as all over thecountry will be a growing sector for years to come. It alsoincludes infrastructure related to environment, water treatmentand sanitation.

About 46 countries designated as LDC beneficiaries forduty free entry for all products. As a result Bangladeshenjoys GSP facilities for all products. But the bulk of theproducts were not significant for Bangladesh.

Most of the products did not able to take the advantage ofGSP, Only RMG can avail the GSP opportunity.

In order utilize the full benefit of Canadian GSP ,Diversification of products is necessary.

Bangladesh offers an unparalleled investment climatecompared to the other South Asian economies.

Bangladesh is a largely homogeneous society with no majorinternal or external tensions and a population with greatresilience in the face of adversity (e.g. natural calamities).

Bangladesh is a liberal democracy. The population of thiscountry irrespective of race or religion have been livingin harmony and understanding for thousands of years.

Broad non-partisan political support for market orientedreform and the most investor-friendly regulatory regime inSouth Asia.

Trainable, enthusiastic, hardworking and low-cost (even byregional standards) labor force suitable for any labor-intensive industry.

The geographic location of the country is ideal for global trade,with very convenient access to international sea and air routes.

Bangladesh is endowed with abundant supply of natural gas,water and its soil is very fertile.

Although Bengali (Bangla) is the official language, English isgenerally used as a second language. The majorityof the educated population can read, write and speak in English.

As a result of low per capita GDP, present domestic consumptionis not significant. However, it should always be considered thatthere exists a middle class with over 10% of the population. Aseconomic growth picks up, the purchasing power will also growsubstantially.

Bangladeshi products enjoy duty free and quota free access to almost all thedeveloped countries. This access to the global market is further helped by thefact that the policy regime of Bangladesh for foreign direct investment is by farthe best in South Asia. Most Bangladeshi products enjoy complete duty andquota free access to EU, Canada, Australia and Norway. Though in limited scale,Bangladesh products already found their access with lower duty in the marketsof Thailand, India and Pakistan. However, talks are underway with China,Russia, Malaysia and other neighbouring countries in this regard.

Investors of Canada might take the opportunity to establish 100% foreigninvestment of joint venture projects. We welcome investors from Canad toinvest in Bangladesh

The government of Bangladesh has provided various opportunitiesand a unique package of incentives to foreign investors. Most potentialsectors for investment in Bangladesh are: Agro-based sectors like food and fruitprocessing, paper and pulp from Jute, gas-based industries, power, fertilizer,renewable energy, backward linkage of RMG including composite Textile Mills, ITsector, leather and leather goods, Ceramics, Pharmaceuticals, Electronics, LightEngineering, Steel, infrastructure development, Hospitals, Education, Tourism &Hotels, shipbuilding etc.

Thank You